The Client Has a Perpetual Inventory System,and Takes an Inventory

question 10

Multiple Choice

The client has a perpetual inventory system,and takes an inventory count of 100 items every two weeks for comparison to the perpetual records.There are no plans to have a complete year-end physical count of inventory.How will the auditor conduct the audit of physical inventory?

• A)Select an attribute sample of items to count at the year end for comparison to the perpetual records.
• B)Select a dollar unit sample of items to count at the year end for comparison to the perpetual records.
• C)Use roll-forwards to carry forward the inventory records from the cyclical counts for an attribute sample of inventory items.
• D)Conduct test counts and compare the perpetual records with a cyclical count during the interim audit.

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Definitions:

Encouraging Response

A reply that provides support, hope, or motivation, often boosting the recipient's confidence and morale.

Honest Response

An answer or feedback provided that is truthful and without deceit, reflecting the actual thoughts or feelings of the respondent.

Suspicious

Inclined to believe that something is wrong or that someone is behaving with deceitful or harmful intentions.

Personal Attack

A form of argument targeting an individual's character or motive rather than the content of their argument.